The open display of tobacco in shops and supermarkets will be banned in an attempt to reduce smoking among children and adults, the health secretary, Alan Johnson, said today.

He acknowledged concerns that the ban would hit small businesses and said it would begin with the big supermarkets, who would be required to sell cigarettes under the counter.

The measure will be introduced as part of a wide-ranging health bill in the new year. A spokeswoman for the Department of Health said businesses would be given "ample time" to adjust to the move.

Medical experts and anti-smoking groups welcomed the ban but the Tobacco Manufacturers' Association warned that the change would hit corner shops hardest because they would lose out on "opportunity sales" of chocolate bars and newspapers.

Chris Ogden, the group's chief executive, said: "We are in the grip of a recession and it is hardly the time to knock small businesses by measures such as these. It [tobacco] is a legal product and it allows consumer choice and competition between manufacturers and retailers."

Johnson said corner shops would need to diversify anyway as smoking rates dropped, and stressed that the government's overriding priority was to reduce smoking, which he called "the biggest public health risk".

He said the primary aim was to reduce smoking among 11-15-year-olds in England and Wales, an estimated 200,000 of whom were regular smokers in 2007.

The experience of other countries where the open display of tobacco has been banned showed that it helped to reduce smoking among young people, said Johnson.

He told BBC Radio 4's Today programme that the "overwhelming evidence and support" in the government's consultation on smoking was for such a ban.

"When they [children] see a point of sale display and as a result of seeing of it they take up smoking ... it's the key evidence as to why 200,000 11-15 year-olds are smoking," said Johnson.

The health secretary said the government planned to ban children from buying cigarettes from vending machines by forcing people to show proof of their age before they bought tokens to use them.

Vending machines are believed to be the source of cigarettes for up to a fifth of young smokers. Johnson said that if the measure was ineffective, he would consider banning machines selling tobacco products.

The minister revealed he had ditched a plan to ban the sale of cigarettes in packs of 10, which were thought to be more affordable to children. He said the consultation, which produced 100,000 responses, had revealed concerns that such a ban could hamper adults' attempts to cut down on smoking.

A ban on prominent displays of tobacco products was reported to have caused a row within the cabinet, with the business secretary, Peter Mandelson, arguing it would affect recession-hit shops.

Johnson is expected to promise a "fully inclusive" implementation, with all possible help given to businesses to deal with any impact.

The Tories have complained that there is no evidence a ban would cut smoking rates and say it could "destroy local corner shops and newsagents that are already suffering now".

The Liberal Democrats have warned of a potential increase in the buying and import of foreign cigarettes.

Action on Smoking and Health (Ash) welcomed the ban on display sales but described the measures against vending machine sales as "half-baked" and urged the government to introduce a complete ban on tobacco sales from the machines.

The Ash director, Deborah Arnott, said claims that businesses would fail because of the move were not borne out by the experience of other countries where such measures had been "popular and effective, without putting shops out of business".

Vivienne Nathanson, head of science and ethics at the British Medical Association (BMA), backed the ban on display sales but said she shared Ash's "disappointment" on the vending machine proposals.

The smokers' lobby group Forest accused the government of "gesture politics". The group's director, Simon Clark, said: "In future it will be easier to buy a pornographic magazine than a packet of cigarettes. What message does that send to young people?

"A display ban will threaten the livelihoods of thousands of small retailers and will almost certainly encourage more illicit trade."

The government has already raised the age limit for buying tobacco from 16 to 18.